L&T Finance Stock Drops 6% Despite Strong Q2 Earnings; Net Profit Rises To ₹973 Crore In September Quarter
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L&T Finance shares fell as much as 6% despite a 32.4% rise in second-quarter net profit to ₹972.76 crore. Its loan book, net interest income and retail disbursements also recorded strong year-on-year growth.
L&T Finance shares fell as much as 6% on Friday, 16 October, despite the non-banking financial company reporting strong growth in profit and income for the September quarter. The stock showed signs of recovering from its intraday low, but the decline came even as most key business numbers improved year-on-year.
The company's net profit after tax rose 32.4% to ₹972.76 crore in the second quarter, compared with ₹734.88 crore in the same period last year.
At 11:53 AM, L&T Finance share price stood at ₹257.45 on the National Stock Exchange (NSE), down 1.74% from the previous day’s closing.
L&T Finance Q2 Results: Income And Loan Book Grow
L&T Finance's total loan book expanded 28% year-on-year to ₹1.36 lakh crore, up from ₹1.07 lakh crore a year earlier.
Net interest income (NII), which reflects the difference between interest earned on loans and interest paid on borrowings, increased 32.6% to ₹3,187.36 crore from ₹2,403.12 crore.
Pre-provision operating profit (PPOP) also rose, gaining 30.3% to ₹1,947.53 crore from ₹1,494.41 crore in the year-ago quarter.
The numbers point to growth across the lender's core business, with higher income and a larger loan book supporting its quarterly performance.
Margins Improve, Bad Loan Indicators Ease
L&T Finance's net interest margin (NIM) improved to 8.88% in the September quarter. It stood at 8.54% in the previous quarter and 8.42% in the same period last year.
Asset quality indicators also moved in a favourable direction. Gross Stage 3 assets, which reflect loans classified as credit-impaired, fell to 2.7% from 2.86% in the preceding quarter.
Credit cost declined to 2.46% from 2.54% in the June quarter. Lower credit costs can help lenders retain more of their operating income, although the trend needs to be assessed alongside future loan performance.
Retail Lending Continues To Expand
Earlier this month, L&T Finance reported growth in retail lending for the September quarter. Retail disbursements rose 27% year-on-year to ₹24,000 crore, compared with ₹18,883 crore a year earlier. Its retail loan book grew 29% to ₹1.35 lakh crore from ₹1.05 lakh crore in the year-ago period.
Despite the improvement in earnings, margins and asset quality, L&T Finance shares came under selling pressure on Friday. The available figures do not establish a specific reason for the stock's decline, and investors will need to assess the full results and management commentary to gauge the market's response.
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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